Do I have to tell the IRS that I was a student?

Question

I know this question seems backwards, because most people obviously want to tell the IRS that they were students so that they can get a bigger tax refund.

However, my wife and I were very fortunate and had all of our educational expenses paid for by Scholarships & Grants, so I don't think we would be getting any additional refund.

Do I legally have to tell the IRS that I was a student? I just don't want to go through the trouble of declaring all the scholarships & expenses just to show that they cancel each other out.

Answer 1

Your school files a 1098-T with the IRS, reporting the tuition paid and scholarships/grants received.

Therefore, you will have to account for scholarships and grants, especially qualified educational expenses outside of the school that were paid for by these grants.

In general, the IRS does not have "useless" paperwork, but consistently requires that both sides of a transaction report it. This prevents one party unilaterally hiding income.

Answer 2

I just don't want to go through the trouble of declaring all the scholarships & expenses just to show that they cancel each other out.

While that seems like a great idea, it will not work in the end.

The IRS receives copies of many of those same forms that are sent to you. They go through a massive crosschecking of those forms against the returns they receive.

when they see items that are missing they apply them to returns they should have be included in. The worst case scenario is when you used an item that doesn't get automatically reported to the IRS and used it to balance an item that isn't reported to the IRS. When the IRS applies the item you skipped they will suddenly see missing income and hit you with additional taxes and penalties and interest. You might be able to prove everything in the end but it will cost you a lot more time and paperwork.